BofA Fined $100,000 for Misleading Advice
November 17, 2010
NEW YORK (Reuters) - Massachusetts' top securities regulator has fined Bank of America Corp $100,000 after finding two of the firm's financial advisers misled investors in a bond sale.
John Keating and Reggie Aquino sold Fannie Mae and Freddie Mac step-up bonds, assuring at least one client that they carried a government guarantee, said William Galvin, Massachusetts secretary of state, in a statement.
The client subsequently bought $2 million in the step-up bonds, which have interest rates that increase over time and are not guaranteed by the government. After the regulator began investigating the client got his money back, said Galvin.
Keating and Aquino worked for Banc of America Investment Services (BAI) in Hingham, Massachusetts. BAI has since been incorporated into Bank of America's Merrill Lynch brokerage unit.
The regulator also sent an order to Bank of America setting out a compliance training program for all of its former BAI advisers who now work for Merrill Lynch in Massachusetts.
In addition to training, a tenth of these advisers will be subject to a test where they will have to explain the details and risks of similar bonds to a mock "client."
The regulator has also ordered Keating be subject to heightened supervision, with his orders reviewed daily. Aquino is no longer with the firm, said Galvin.
"We are pleased to resolve this matter," said a Bank of America spokesman.
(Reporting by Helen Kearney; editing by Andre Grenon)
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BofA, JP Morgan Say They Are Fixing Foreclosure Processes
By Alan Zibel
Published November 16, 2010
Dow Jones Newswires
WASHINGTON -(Dow Jones)- The executives in charge of Bank of America Corp. (BAC: 11.71 ,-0.25 ,-2.09%) and J.P. Morgan Chase & Co.'s (JPM: 39.27 ,-0.43 ,-1.08%) mortgage operations on Tuesday said they are fixing their processes for managing foreclosures.
Several major lenders have been examining the way they handle foreclosure cases amid revelations that banks used so-called "robo-signers" to file large numbers of documents without reviewing their contents.
"We regret the errors that we have discovered in our processes," David Lowman, J.P. Morgan's top home-lending executive in testimony prepared for delivery at a Senate Banking Committee hearing on Tuesday. "We have worked hard to correct these processes so that we get them right."
Chase, which collects payments for about nine million loans, has set up procedures to make sure that workers who process foreclosure documents actually review them, Lowman said.
In addition, the New York-based bank has established "extensive training" for employees who handle foreclosed documents, Lowman said.
Barbara DeSoer, president of Bank of America's home loan business, said in prepared remarks that "we have identified areas for improvement as a result of our intensive review" of 102,000 cases.
"We are taking the need for improvement very seriously and are implementing changes accordingly," DeSoer said.
However, she insisted that the Charlotte, N.C.-based bank hasn't foreclosed on borrowers who haven't missed payments. The company's review, she said, "has indicated that the basis for our foreclosure decisions is accurate."
DeSoer said Bank of America has set up a new form for creating foreclosure affadavits -- documents that summarize the facts of a foreclosure case such as a borrower's name and total amount owed.
Those documents, she said, "will be individually reviewed by the signer" and notarized. The company, she said is "carefully restarting" the foreclosure process.
Bank of America collects mortgage payments for 14 million Americans and is the largest mortgage servicer in the country, handling about 20% of all U.S. mortgages.
About 14% of the company's borrowers, or nearly 2 million households, have missed mortgage payments, DeSoer said.
Nearly 600,000 of those borrowers haven't made any payments in nearly a year.
Also testifying at Tuesday's hearing will be Iowa Attorney General Tom Miller, who is leading a 50-state probe into the foreclosure paperwork problems.
In testimony prepared for Tuesday's hearing, Adam Levitin, a professor of law at Georgetown University, will warn of mounting evidence that "there may be pervasive defects" throughout the U.S. system for foreclosure and mortgage securities
Copyright © 2010 Dow Jones Newswires